Unlocking Clarity: What You Need to Know About FEMA’s Latest BCA Toolkit Updates
by Michael Paul Morgan-Dodson, APA, CFM, Benefit Cost Analyst
FEMA rolled out important changes to its Benefit-Cost Analysis (BCA) Toolkit, with more updates on the horizon. These revisions—part of pending guidance for FEMA-funded programs—impact how benefits are calculated, and projects are evaluated. This update breaks down key changes introduced in the June 4, 2025 release, helping you stay informed and ahead of the curve.
Discount Rate Update
The BCA Toolkit was updated to change the default discount rate to 7% from 3.1%, following the Office of Management and Budget (OMB) guidance. This change affects all new project BCAs and aligns with the latest federal guidelines.
- The default Discount Rate in the Cost Estimation section is now 7%.
- When reviewing BCAs completed with the previous 3.1% discount rate, analysts can still select 3.1% from the toggle next to the Discount Rate input.
- A warning message will appear below the Discount Rate input and in the BCA Summary section if the 3.1% rate is selected, indicating that the default rate has been overridden.
- Additionally, the 3.1% discount rate will be visually highlighted with an oval on the Project Summary screen and in the report.
Pre-Calculated Benefits Update
The BCA Toolkit’s pre-calculated benefits were updated to reflect the 7% discount rate. The revised pre-calculated benefit values are available on the How to Complete a Streamlined BCA webpage. The updated values for flood acquisition, flood elevation, and residential tornado safe rooms are now integrated into the Toolkit.
The Streamlined pre-calculated benefits also changed. The elevation benefit is $231,640 and the acquisition benefit is $365,747. The pre-calculated benefits for hospitals, generators, and non-residential wind retrofit remained unchanged. The post-fire pre-calculated benefits were removed from the tracker and FEMA Streamlined benefit page.
Change in Environmental Benefits
The environmental benefits in the BCA Toolkit were slightly revised and continue to include additional benefits for creating open space, physical plantings, wetlands, coral reefs, and others under the Ecosystem Services Loss section of the toolkit. Green infrastructure improvements and water recharge projects are still options in the toolkit, although they no longer receive additional benefits in the calculator.
Removal of Social Benefits
In a significant shift, FEMA’s updated BCA Toolkit reflects an anticipated policy change: the removal of social benefits from all benefit-cost analyses. This means that social benefits will no longer factor into calculating total project benefits. This change could alter the benefit-cost ratios of certain project types. Projects relying on modules such as Flood, Historical Damages/Professional Expected Damages, Landslide, and Hurricane Wind are especially likely to see an impact. Understanding this change is critical to applicants as they evaluate project viability and prepare submissions under the new guidance.
FEMA notes that removing social benefits simplifies the BCA Toolkit’s interface. The card banner text was revised (i.e., “Standard Benefits – Building Damage” was changed to “Building Damages”), and the BCA Summary section was streamlined to include only the Total Project Benefits, Total Project Cost, and Benefit-Cost Ratio.
Riverine Future Precipitation Impacts and FFRMS Removed
In response to Executive Orders issued under President Trump, FEMA removed climate-related features from the Riverine Flood Module in the BCA Toolkit. Specifically, the functionality to account for future precipitation impacts and the Federal Flood Risk Management Standard (FFRMS) compliance check were eliminated.
Previously, these features enabled users to factor in projected increases in rainfall (4% and 7% more rainfall) and ensure that the project accounted for climate change through higher construction standards and stronger design requirements (e.g., higher required elevations, strong wind design standards). Their removal could affect riverine flood mitigation projects’ projected benefits and structural requirements.
Distributional Weights Eliminated
As part of compliance with Executive Orders issued under the Trump Administration, FEMA removed the distributional weights functionality from the BCA Toolkit. This change, outlined in the January 8, 2025 release notes, eliminates using the distributional weight multiplier (DWM), which is designed to help lower-income communities.
Without the DWM, the Total Building Replacement Value is now calculated as the square footage of the building multiplied by the Building Replacement Value per square foot. This removed regional and census tract-based adjustments from the toolkit added to the calculator in January. These adjustments were designed to account for homes in lower-income neighborhoods, which are often smaller and lower in market values, leading to differences in cost-effectiveness evaluations compared to higher-income, larger home communities.
Updated Inflation Index for May 2025
The BCA Toolkit’s inflation index was updated from 1.675137096 for January 2025 to 1.703880239 for May 2025, to reflect adjustments made by Engineering News-Record (ENR). This change is reflected in the increase to the pre-calculated benefits from the previous 2022 levels and the calculation of adjusted cost increases, depreciation rates, and other internal calculations in the toolkit.
FEMA’s BCA Toolkit update introduces sweeping changes that reshape how benefit-cost analyses are conducted for federally funded projects. These changes may significantly affect project viability—especially for flood mitigation and underserved areas—and underscore the need for applicants to reassess their strategies in light of the evolving policy landscape.
